1. The rise and rise of the banks, ahead of an inevitable fall
The local sharemarket already has problems with companies leaving the bourse, and not enough new listings. Now it has a problem with too many powerful banks. Like the tech stocks on Wall Street, the big four banks in Australia are the dominant players on the ASX. Fortunately we have BHP and CSL - otherwise the five biggest companies would be Commonwealth Bank, National Australia Bank, Westpac, ANZ and Macquarie Group. CBA and Macquarie hit new records yesterday. The other big three banks are trading around seven year highs. Analogous to Wall Street and the tech stocks, local investors who didn't buy banks this year have probably underperformed. But what happens when the cycle turns for the banks? What happens when they fall from favour? And they will. What are superannuation returns going to look like when bank share prices stop rising? Most analysts think banks are over-valued. However they don't look as unattractive as the big miners, the other major grouping among the mega caps on the ASX, where lower commodity prices are hitting share prices hard. BHP, Fortescue Metals and Rio Tinto have all gone backwards over the past year. A lack of diversity at the top end of the ASX is a problem for investors and super funds and the day of reckoning is coming.
2. Apple's big leap into health
Demographics rule, and the world's biggest company, Apple, knows it. Developed economies are getting older. Globally over the next 30 years, the number of people aged 65 years and above is expected to double to about 1.6 billion. That will create a bunch of health challenges. It's why this week's launch of new iPhones, Apple Watches and AirPods was as much about health, as it was technology. A pair of AirPods will soon be able to determine if you have a hearing deficiency in five minutes. And then they'll be able to act as a hearing aid. An Apple Watch will be able to detect whether a wearer has sleep apnoea. Apple CEO Tim Cook said the new devices were about enhancing creativity, accessibility and health awareness. They are also about making money for the $US3.5 trillion company in an ageing world, where half of Apple's revenue comes from iPhones. The cost of the new iPhone 16 range will be less than the iPhone 15 range, and there will be no increase in what a consumer needs to spend on AirPods or watches. All this is enabled by artificial intelligence, or as Cook puts it, Apple Intelligence. The new devices have faster microchips, can perform AI tasks, have longer battery life and charge faster. But so do many competitor products. It may be the health benefits which will ultimately set Apple apart.
3. Will social media bans work?
The federal government and opposition are talking tough on social media bans for children under the age of 16. In theory it's a great idea but how do you ban something that's ubiquitous? I have absolutely no idea. It is much harder than stopping a 17-year old from buying alcohol. Much harder. It seems to me akin to turning back the tide. Maybe "age assurance technologies" can play a role. Keeping the alcohol comparison going, my 17-year old informs me he can't use his debit card to buy alcohol because his bank won't allow it. That's a good thing and maybe there's an equivalent for social media. Parents need to play a role, while stronger regulation of the tech platforms will also help. But the long-term solution to a very complex question needs to come from the demand side of the equation, not the supply side. Bans on usage is a supply side answer, and I agree we need them. But it is a band-aid solution. The long-term answer is about educating social media users to understand the pros and cons of what they are scrolling through. The solution is about making users aware of what is right and what is wrong. Social media, like alcohol, tobacco and gambling, is legal and while that's the case, the best antidote is education.
4. Rupert Murdoch: hero or villain?
Rupert Murdoch is Australia's greatest-ever business person, if measured purely on the basis of money and influence. He took his father's Adelaide-based Herald & Weekly Times and created arguably the most powerful media company (pre-digital) in the world. Next week the 93-year old Mr Murdoch and his son Lachlan are going to court to argue that the latter should get control of the family trust when the former dies. Rupert Murdoch wants his conservative-leaning son to run the business, rather than allowing his other, more centrist, children Prudence, James or Elisabeth, to take control. The Murdochs are fighting hard to stop other media outlets covering the court case - which is ironic to say the least. This week a shareholder filed a resolution to eliminate the dual class structure of News Corp when Mr Murdoch dies. As it stands Rupert owns 14 per cent of the shares and controls 40 per cent of votes. The shareholder asks why should that continue when the children own the shares. ABC is currently running a three part series on the life of Lachlan Murdoch and Nine media is fully invested in Murdoch stories. The Murdoch drama is going to fill our lives for the next few weeks and the news will be overwhelmingly anti-News Corp. News Corp has, at times, been seen as the evil empire. It still is to many. But undoubtedly Rupert Murdoch has created a phenomenally powerful company, lauded and loathed by Presidents, Prime Ministers and royals. His media empire has helped democracy evolve, and been a very loud voice for conservative politics. That's not a bad thing and should be kept in mind as the News Corp drama unfolds over coming weeks.
5. How Kamala Harris can win the US Presidential election
Barring a disastrous debate today - I'm writing ahead of it - Kamala Harris is in the driving seat to win the US election. She just needs to make sure she doesn't stuff it up by outlining too many policies. Rightly or wrongly the US Presidential system, whereby voters cast a ballot for the person they want to be President, is as much about popularity as it is about policies. Kamala Harris is the face of change in the Presidential poll, due in 55 days. The 78-year old Donald Trump looks old. Polls this week put the two candidates neck-and-neck. Trump might be ahead by a whisker. More telling is that one-third of voters feel they need to learn more about Harris and where she stands on issues. For Trump, who has been in the limelight for decades, that figure was only nine per cent, according to a New York Times/Sienna poll. But Harris is best served by not talking too much about policies, which are her Achilles heel. On hotbed issues like immigration she doesn't haven't a great record. On other issues around social policy and the environment, Harris is as left leaning as Trump is right leaning. And the US is, broadly, a conservative society. So the less Harris says about policy the better. Apart from today, she's only had one press conference in the past six weeks, thus avoiding pesky policy questions. The Democrats are making the election a beauty contest between the two candidates. If they can keep doing that, Kamala Harris will win.
BEST OF THE WEEK
IF YOU MISSED THIS GUEST, CATCH-UP NOW
This week Apple launched the new iPhone, fully embracing AI technology. But the tech giant didn't stop there, also unveiling a new Apple Watch and new AirPods, with a real focus on the health benefits. Stephen Fenech from TechGuide.com.au took us through the new technology - and why it may be a gamechanger.
"What is your take on the shrinking ASX 200 following the number of exits from big names in 2023-24? New IPOs are also not coming at the same rate.
Do you see a potential fear from overseas investors or institutional investors avoiding future investments due to concentration?"
AND ONE LAST THING...
It's been a big week for belugas. First, a famous beluga whale - once thought to be a Russian spy because of its mysterious harness - was found dead in Norwegian waters, sparking even more conspiracy theories.
Then, hundreds of people turned out to see one of the strangest-looking aircraft in the world fly into Heathrow for the first time. The massive jet is nicknamed the Beluga, because... well, you'll get it when you see it.
